Bookkeeping for artists – Part 2

Bookkeeping is one of those things that (most) artists dread doing. It has a lot to do with numbers and business and it can look scary, especially if you’re starting managing your business account.

This is a long post, but very easy to follow, so bear with me!

A few years ago I looked for an accountant and was introduced to a type of spreadsheet that is really simple but effective to keep track of your earnings and expenses and see, clearly, where your money as an artist is being spent. If you’d like to download a sample of that spreadsheet, please click here.

Let’s have a look:

Summary (Purple)

When you open your spreadsheet file you’ll see the Summary Tab.
You’ll notice that it starts off with a Summary of your year and it shows:

* How much you’ve earned through your sales (of products and services)* How much you have spent on your business purchases/expenses* How much you have spent on your utilities (if you work from home)* What is your total annual profit (earnings minus expenses)

At the bottom, it has tabs that display a dedicated spreadsheet “page” for each of these above categories, plus an Invoices/Receipts category for you to keep track of your invoicing.

Sales (green)

Click on the Sales_2018 tab and you’ll see this:

You’ll notice there’s a vertical bar that divides this spreadsheet in two.
To the left of the green vertical bar, you’ll have the overall info about your sales and you’ll input:

* The date you’ve made a sale (product or service)
* The description of that sale (to whom it was made and possibly what, but keep it short)
* A reference number/code that YOU will create, based on your invoice numbers (so you’ll know from which invoice the money came from)
* The amount of money you’re due or have received from that sale.
* How the payment was made – cash, credit or debit card, cheque, etc.

To the right of the green vertical bar, you’ll create designated columns according to where your money/sales are coming from, so you’ll be able to quickly discover how much money each of your income streams is making.

In the template spreadsheet, I have the following columns for income streams:Gallery exhibition (if you sell at galleries); Consignation (if you leave products in consignation); Online (if you sell services or products online) and Books (if you make/sell books). You can change these according to your own needs.

On the right side, you’ll INPUT, under the specific income stream category for that sale, the SAME MONEY VALUE you have put on the left side of the green vertical bar. It is so you can categorize your income.

At the bottom of the columns, you’ll see ALL totals added. On the left side, the overall sales you’ve made and on the right side, the sales in each income stream category.

Purchases (yellow)

Click on the Purchases_2018 tab at the bottom of the spreadsheet and you’ll see this:

Just like the Sales tab, the purchases tab has a yellow vertical bar that divides it in two. To the left of the bar, you’ll have the overall information about your business purchase/expense and to the right side of the bar, you’ll have designated columns for each of your business expenses categories.

On the left side you’ll input:

* The date you’ve made a purchase/expense (of product or service)
* The description of that purchase (where and what)
* A reference number/code that YOU will create (and will also write on each specific purchasing receipts – that’s why we keep them, remember?)
* The amount of money you’ve paid for that product or service
* How the payment was made – cash, credit or debit card, cheque, etc.

On the right side, you’ll INPUT, under the specific business purchase/expense category, the SAME MONEY VALUE you have put on the left side of the yellow vertical bar. It is so you can categorize your expenses. If you work from home do not include any utilities here.

At the bottom of the columns, you’ll see ALL TOTALS added. On the left side, the overall purchases/expenses you’ve made and on the right side, the purchases/expenses in each category.

Utilities (blue)

Click on the Utilities_2018 tab at the bottom of the spreadsheet and you’ll see this:

The Utilities tab comes in handy if you are a freelancer and works from home. You can claim 20% of your home utilities for your business if you work from home.

Just like the Sales tab and the purchases tab it has a blank vertical bar that divides it in two. To the left of the bar, you’ll have the overall information about your utilities and to the right side of the bar, you’ll have designated columns for each of these utility expenses.

On the left side you’ll input:

* The date you’ve paid for that service/utility
* The description of that service/utility
* A reference (usually I write the name of the provider)
* The amount of money you’ve paid for service/utility
* How the payment was made – cash, credit or debit card, cheque, etc.

On the right side, you’ll INPUT, under the specific utility category, the SAME MONEY VALUE you have put on the left side of the blank vertical bar. It is so you can categorize your utilities.

At the bottom of the columns, you’ll see ALL TOTALS added. On the left side, the overall utilities you’ve made and on the right side, the utilities in each category.

Invoices & Receipts (grey)

Click on the Invoices_Receipts_2018 tab at the bottom of the spreadsheet and you’ll see this:

The Invoices & Receipts tab is perfect for keeping track of payments that clients made (or didn’t) to you.

Just like the other tabs, it has a grey vertical bar that divides it in two.To the left of the bar, you’ll have all the necessary information to keep track of your invoices and to the right side of the bar, you’ll have the information about your receipts.

On the left side you’ll input:

* The invoice reference number (You should always have an invoice number in every invoice you send, and if you are starting, just create something that you will remember)
* The date the invoice was paid (I always leave it blank until it’s paid, so you know when to send the client a gentle reminder to pay)
* The name of your client (if more projects with the same client, add another column for “project”).
* The amount of money you’ve charged for your service/product
* When you sent the client the invoice/last reminder
* To which month the work refers to
* From which source (income stream) is the work

On the right side, you’ll add:

* The receipt reference number (once you have received the money, send your client a receipt so they know you have the money)
* The date in which you sent the receipt

At the end of the year, the totals from your Income Tab should match the one from your Sales Tab.

These are all the info you need to keep track of that you can send to your accountant so you can make your tax returns for the year. Note that the template spreadsheet is comprehensive and each tab has a few red corners in them, these are small notes that I have inserted in the template so you can understand the different parts of it.

I hope this will help with your freelance bookkeeping!

Please let me know if you would like to know more about other aspects of the business of freelancing. Have a great day!